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10.1 Establishment of the Bureau

<< Title X Overview

10.1 Establishment of the Bureau

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10.1.     Establishment of the Bureau.  The Bureau has a rather unique structure.  It is established within the Federal Reserve System but will be treated as an independent bureau.  It will have the status of an executive agency.[§ 1011]

10.1.1.              How will the Bureau be Organized.  The Director of the Bureau ("Director") will be appointed to a five-year term by the President and must be confirmed by the Senate.  The Director can only be removed by the President for cause. The Director is the Bureau's only political appointment with the Deputy Director being appointed by the Director and empowered to conduct the affairs of the Bureau in the absence of the Director.[§ 1011]  The Director will appear before Congress for hearings on a semi-annual basis to report on the activities of the Bureau and the state of consumer financial protection.[§ 1016]  The Director is a member of the Oversight Council, the Board of Directors of the FDIC, and the Federal Financial Institutions Examination Council.[§§ 111; 332; 1091].

            The units within the Bureau will include: (i) a Research Department that will analyze and report on consumer related issues; (ii) a Community Affairs Department that will address the  provision of consumer financial products to underserved consumers and communities, and will collect, monitor, and respond to consumer complaints; (iii) an Office of Fair Lending and Equal Opportunity that will provide oversight and enforcement of Federal fair lending laws, including the Equal Credit Opportunity Act ("ECOA") and the Home Mortgage Disclosure Act ("HMDA"), coordinate fair lending efforts of the Bureau with other Federal agencies and with state regulators, and work with financial institutions and consumer groups on the promotion of fair lending compliance; (iv) an Office of Financial Education that will be responsible for developing and implementing consumer education initiatives: (v) an Office of Service Member Affairs that will develop and implement initiatives for members of the military and their family members; and (vi) an Office of Financial Protection for Older Americans, that will develop and implement initiatives for senior citizens.[§ 1013] 

There will also be a Consumer Advisory Board ("Consumer Board") that will consult with the Bureau on Federal consumer financial laws.  The Consumer Board will also provide information on emerging practices in the consumer financial products industry.  At least six members will be appointed to the Consumer Board by the Director upon the recommendation of the regional Federal Reserve Bank Presidents.  The Consumer Board will meet at least twice per year.[§ 1014]

10.1.2.              Transfer of Duties of Financial Regulatory Agencies; Bureau Transfer Date.  All consumer financial protection functions of the Fed, the OCC, the OTS, the FDIC, and the National Credit Union Administration ("NCUA") ("Designated Laws") are transferred to the Bureau.[§ 1061]

A single calendar date for the transfer of functions to the Bureau will be designated by the Treasury Secretary within 60 days of the enactment of the Act ("Bureau Transfer Date").  The Bureau Transfer Date will be not earlier than 180 days nor later than 12 months after the date of enactment of the Act, but may under certain circumstances be extended to no later than 18 months after the date of enactment of the Act.[§ 1062]

            The Treasury Secretary is authorized to perform the functions of the Bureau until the Director is confirmed by the Senate.  The Treasury may provide administrative services necessary to support the Bureau before the Bureau Transfer Date.[§ 1066]  

10.1.2.1.           Designated Laws.  The Designated Laws include (i) the Alternative Mortgage Transactions Parity Act of 1982; (ii) the Consumer Leasing Act of 1976; (iii) the Electronic Fund Transfer Act ("EFTA"); (iv) the ECOA; (v) the Fair Credit Billing Act; (vi) the Fair Credit Reporting Act ("FCRA"), subject to certain exclusions; (vii) the Home Owners Protection Act; (viii) the Fair Debt Collection Practices Act: (ix) certain privacy provisions of the Gramm-Leach-Bliley Act; (x) HMDA; (xi) the Home Ownership and Equity Protection Act of 1994; (xii) the Real Estate Settlement Procedures Act ("RESPA"); (xiii) the S.A.F.E. Mortgage Licensing Act of 2008 ("SAFE Act"); and (xiv) the Truth in Lending Act. [§ 1002]

10.1.3.              Transfer of Functions of the FTC.  The authority of the Federal Trade Commission ("FTC") to issue guidelines, conduct a study, or issue a report mandated under Designated Laws will be transferred to the Bureau.  The authority of the FTC under the Federal Trade Commission Act ("FTC Act") or any law that is not a Designated Law to prescribe rules, issue official guidelines, or conduct a study or report under any such law will not be affected.  The FTC will have authority under the FTC Act to enforce a rule issued by the Bureau with respect to a Covered Person subject to the jurisdiction of the FTC as a violation of a rule issued by the FTC under the FTC Act.[§ 1061]                  

10.1.4.              Transfer of Functions of the HUD.  All of the consumer protection functions of the Department of Housing and Urban Development ("HUD") related to RESPA, the SAFE Act and the Interstate Land Sales Full Disclosure Act are transferred to the Bureau.[§ 1061]

10.1.5.              General Principles Regarding Transfers.  The validity of any existing right, duty or obligation of the transferring agency or any person that arises under any provision of law relating to any consumer protection function of the transferring agency will not be affected.  Suits by or against a transferring agency relating to consumer protection will not be affected, except that the Bureau (other than in the case of the FTC) will generally be substituted for the transferring agency as a party to the proceeding.[§ 1063] 

 The Act provides that no later than the Bureau Transfer Date, the Bureau will publish a list in the Federal Register of rules and orders of transferring agencies that will be enforced by the Bureau.       Any proposed rule of a transferring agency regarding consumer protection functions that were proposed before the transfer date but were not published as a final rule shall be deemed to be a proposed rule of the Bureau.  Any interim or final rule of a transferring agency regarding consumer protection functions that has not become effective as of the transfer date shall become effective as a rule of the Bureau in accordance with its terms.   

10.1.6.              Independence.  The Act seeks to ensure that while the Bureau will exist within the Fed, it will be autonomous.  The Fed may not intervene in a proceeding before the Bureau, take action with regard to Bureau personnel, or merge or consolidate the Bureau.  Rules and orders of the Bureau are not subject to approval or review by the Fed.  No other Federal government authority will have any authority to require the Bureau to submit an advance version of a communication with Congress, provided the Bureau indicates that the views expressed are those of the Bureau and do not necessarily reflect the views of the President or the Fed.  Moreover, neither the Bureau nor the Fed shall be liable under any provision of law for the other party's action or inaction.[§ 1012] 

10.1.7.              Funding.  The Bureau will be funded by transfers from the combined earnings of the Federal Reserve System beginning with an amount equal to 10 percent of the total operating expenses of the Federal Reserve System for fiscal year 2010 and increasing to 12 percent for fiscal year 2012 and thereafter.  The funds received from the Federal Reserve System are not subject to Congressional review.  Under certain circumstances, the Director may seek the appropriation of additional funds from Congress.[§ 1017]